Macro-fiction

Think I mentioned before that I question the value of making decisions for the whole nation based on the "macro" perspective. Macro means looking at the nation as a whole, the economy as a whole, health care spending as a whole, etc. It's an extremely useful aggregate for scholars or historians (sometimes) but I'm not so sure it's useful for developing policy.

For example, wasn't it 2005 that Katrina hit? So looking at data from that year and ignoring everything else, you'd have to conclude that Americans spend one hell of a lot of money on repairing water damage. Should we mount a socialist program for that?

The same principle applies to health care and insurance. Of course, insurance adjusters and statisticians have finely-sliced demographics on which groups get the most money and benefits, at what age, and why -- apparently more money is spent on people in the last years of their lives than at any other time.

Surprise, surprise. People get sick, they may recover in part and stagger along for a time, and then they die. I don't think we even need insurance adjusters to figure that out.

The funny thing is, Obama seems to be looking at these high-cost groups in order to find some way to reduce what's spent on them.... apparently so he can offer this money to another group that has less use for it. This way, the Macro statistics on socialized medicine will look better.

Yeah. Kill all the sick people. That's a sure way of reducing health care costs. And that is fundamentally what Obama has planned.

Anyway, the macro view is, as I said, very useful for scholars as a means of number-crunching or something. But it isn't a useful or practical way of developing a general policy. You just can't lump people all together. You end up eliminating the cost of cancer treatments for a 70-year-old woman in order to guarantee insurance to a 24-year-old gymnast who probably has very little use for it. It looks good on the books, but it isn't a practical or reasonable way to provide health care. You're only taking it away from the people who need it.

And I guarantee, if health care becomes "free," suddenly many more people will believe they need it. Rather than sitting in the bathroom with the shower going hot, making steam, to break up chest congestion from a cold, people will be lining up at the doctor's office, demanding their fair share of attention and antibiotics. That part is entirely predictable.

And this applies to not only health care, but to everything else as well.

Anyone remember a while back when the federal government for some reason had a huge inventory of cheese? Apparently they'd bought tons of excess cheese from US dairies to support the price of cheese in the supermarket. The government floated the idea of redistributing this cheese to people who were getting welfare and food stamps in place of some of their cash benefits.

I don't know, although the scheme does seem convenient, is this a plan that works? People are hungry, so let them eat cheese? What if, instead of cheese, the government had purchased an excess of pine tar to support that industry? Would the feds be passing out barrels of pine tar and a booklet of recipes for making it palatable?

That's the trouble with the macro view.

And wouldn't it be better to let the dairies suffer a bad year and learn how much cheese to make instead of supporting their dreams of huge cheese demand? After all, the time and money they invested in making cheese might have been better spent making sour cream or yogurt. They should know that and make the adjustment.

The only way you can even try to get macro economic management to work is to take complete control of everything. And heaven knows, that doesn't work. Like, would there be some kind of Standing Fashion Committee in congress, determining what kind of shoes should be made in the US? The way congress operates, by the time they reached a decision, they'd have shoe factories making sandals in December and boots in April. That's pretty much the way it worked out in the USSR. But maybe the Commissars did manage to balance their books.

I doubt it, though. I knew some Russian Jews who were allowed to leave the USSR way back in the 1970s -- before the USSR collapsed -- and what I heard from them was that the black market was pretty much a way of life. No one even believed there was anything wrong with it. You had to cheat the system just to survive.

One of these Russians, actually he was Ukrainian, told me that somehow about three-quarters of all the produce raised in the Ukraine managed to fall off the truck before it reached Moscow. No one could figure it out.

And just to add... I had both macro and micro economics in college. In the micro class, one of the first things we learned was this graph of an apparently cast-in-stone principle. Picture a graph, more or less an "L" shape. Now draw a diagonal line from the top of the tall stem to the end of the short base. This illustrates what happens to nearly any kind of enterprise when you raise prices. That is, you'll make more money on fewer goods. Net gain -- zippo. Except you do stand to lose customers long term.

That's a given. Cast in stone.

Think about that in terms of tax increases.... on anything. The only way you can get around that kind of result is if you put a gun to the buyer's head and force him to pay the higher price. Or put a gun to the producer's head and force him to continue to produce. Etc.

This is another way of explaining why socialism doesn't work.